Viability of Rajasthan refinery yet to be worked out

New Delhi, June 26 (UNI) The project for refining 7.5 million metric tonnes per annum (MMTPA) of crude at the Rajasthan refinery is still undergoing due diligence between ONGC and the state government.

The move would also help in arriving at an agreed fiscal support by Rajasthan government for achieving the economic viability of the project, the Corporation said today.

In this regard, a meeting was held with a very senior delegation, comprising of two principal secretaries and two secretaries from Rajasthan with ONGC on June 11.

Besides the above proposal, a parallel exercise was undertaken by ONGC to evaluate the viability of downsizing the refinery to 4 MMTPA capacity to contain the capital expenditure.

The downsizing of the capacity was being explored in the context of (a) consumption of the entire truncated crude oil production at the rate of 80,000 billion barrels per day will be absorbed by the well-head refinery eliminating the capex on the crude evacuation pipeline (b) consuming the entire production of the Refinery in the domestic market thereby eliminating the cost for laying the product pipeline for exports and (c) extending the availability of the Barmer crude, at reduced rate of production (80,000 bbls/day), close to the economic life of the refinery.

The economic evaluation for the 4 MMTPA refinery (in lieu of the crude evacuation pipeline) is not working out to be viable and since a decision on the original size of the refinery was likely to take some time the decision on the laying of the crude oil pipeline for the evacuation of the Barmer crude will be taken within this week.

Substantively, the proposal for the development of 7.5 MMTPA refinery, which is independent of pipeline proposal, is under serious consideration for which discussions with the GoR officials are being pursued with full vigor.

Recent media reports had said that the government has shelved plans to build a refinery in Rajasthan to process crude oil found by Cairn India in the state and instead will lay a pipeline to transport it to Gujarat coast for sale to refiners.

UNI